SA no longer on Atlas Merchant Capital’s investment radar

Contrary to local analysts, CEO Bob Diamond says the local banking sector is established and valuations are high

Atlas Merchant Capital, which earlier sought to bid for Barclays Africa, is not seeking more investment opportunities in SA.

Founding partner Bob Diamond says the local banking sector is established and valuations are high. Atlas Merchant Capital had viewed Barclays Africa as a "terrific opportunity", but only if it could secure a majority position, CEO Diamond said on Wednesday on the sidelines of the Global Business Forum on Africa in Dubai.

Atlas Merchant Capital and Atlas Mara, its listed arm formed to acquire banks in Africa, were not seeking acquisition opportunities in SA, Diamond said. SA’s banks were established and traded at high multiples.

Diamond’s views contrast with those of domestic analysts, many of whom say the country’s banking shares — weakened by low economic growth and sovereign credit downgrades — are bargains. "A lot of the value-add we can bring in other countries is already in SA," he said. Atlas Mara was seeking opportunities in Ethiopia, Kenya and Ghana instead.

The group had made nine acquisitions in seven African countries since its formation in 2013, with a view to investing in majority positions in 10 to 15 countries. "The South African banks have done the best job of expanding throughout Africa, but I think with mixed results. Our opportunity to be a truly African bank — not a global or South African bank acquiring African banks — is one of our competitive edges."

As the former CEO of Barclays, Diamond played a critical role in integrating Barclays Africa’s operations on the continent. Through a consortium that initially included private equity group Carlyle, Atlas Merchant Capital had hoped to buy a controlling stake in Barclays Africa. These hopes were dashed when Barclays elected to sell its stake in tranches on the open market.

"Fairly early, on it was clear to me that [Barclays CEO] Jes Staley and the Barclays board found it advantageous to sell down in pieces. Once that was clear we realised the opportunity was not for us. We were very interested …. I think it’s a fantastic bank."